IRAQ ACCEPTS U.S. PROPOSAL TO TALK ABOUT RESOLVING CRISIS IN THE GULF<BR>

Iraq on Saturday accepted a U.S. offer to talk about resolving the Persian Gulf crisis. But the Bush administration rebuffed a new bid by the Baghdad government to link a withdrawal from Kuwait to an Israeli pullout from Arab lands.

In the Iraqi capital, tens of thousands of people marched to denounce last week's U.N. resolution authorizing military force against Iraq - and to proclaim their willingness to fight."Iraqis will not tremble if war drums beat," chanted the demonstrators, who burned American flags. "Martyrdom is the way to victory!"

Also Saturday, Pope John Paul II appealed for "patient dialogue" in resolving the gulf crisis. His comment came in a message sent to Christian leaders meeting this week in Baghdad.

Iraq's ruling Revolutionary Command Council, led by Saddam, met Saturday to discuss President Bush's surprise offer a day earlier to send Secretary of State James A. Baker III to Iraq. Bush also invited Iraqi Foreign Minster Tariq Aziz to come to Washington.

"We accept the idea of the invitation and the meeting," the council said in a statement carried by the official Iraqi News Agency.

But it added that "Palestine and the other occupied Arab territories remain before our eyes and at the forefront of the issues that we will discuss in any dialogue."

The Iraqi response initiative referred to Bush as "the enemy of God," saying that "the arrogant president of the United States had consistently opposed dialogue, expressing his hatred of Arabs and Moslems and all those who believe in God and the world's human values."

Despite its harsh rhetoric, the Iraqi leadership promised to work toward dialogue.

The United States has rejected such any such conditions in the past and did so again Saturday.

"Palestine is not an issue on the table . . . there is no linkage," Vice President Dan Quayle said Saturday onCable News Network.

White House spokeswoman Laura Melillo said Iraq had not formally responded to the U.S. invitation to hold talks. She said the invitation was relayed by the U.S. charge d'affaires in Baghdad, Joseph Wilson.

Bush's move was widely welcomed by congressional leaders and foreign allies. But it appeared to cause some uneasiness in Israel, which has not yet formally commented on the overture.

"The fear is that somehow the United States will pay with Israeli currency for its failures in the gulf," said Eytan Gilboa, a Middle East expert at the Hebrew University of Jerusalem. Israelis have expressed concerns that their security might be undermined by any settlement in the gulf that leaves Saddam in power.

Meanwhile, Muhammad Ali, the former world heavyweight boxing champion, had been scheduled to fly Saturday with his group to Amman, Jordan, aboard an Iraqi Airways flight. Aides said he was negotiating to have three more captives freed, but gave no details.